October 15, 2024 • 4 mins
Uncover the hidden power dynamics reshaping the landscape of energy and technology as we spotlight an escalating conflict between AEP Ohio and tech giants like Google, Amazon, and Microsoft. This isn't just a clash over contracts and power hookups—it's a battle over the future of energy flexibility in an AI-driven world. With AEP Ohio's demands for long-term financial commitments facing fierce opposition, the tech companies are countering with requests for a more adaptable tariff system. This episode promises to shed light on how this struggle could set a precedent for similar scenarios across North America, especially as demand for data center power surges.
But that's just the tip of the iceberg. We also explore the ripple effects of PJM's decision to postpone its capacity auction, analyzing the potential repercussions on market reforms and consumer electricity bills. Meanwhile, the Biden administration's push to enhance transmission infrastructure, alongside New York's strategic renewable growth plan, underline significant steps toward boosting energy capacity. Plus, a Harvard study unveils the underestimated costs of green hydrogen projects, challenging conventional wisdom about their feasibility. Join us for a comprehensive look at these pivotal developments and their implications for the future of energy.
But that's just the tip of the iceberg. We also explore the ripple effects of PJM's decision to postpone its capacity auction, analyzing the potential repercussions on market reforms and consumer electricity bills. Meanwhile, the Biden administration's push to enhance transmission infrastructure, alongside New York's strategic renewable growth plan, underline significant steps toward boosting energy capacity. Plus, a Harvard study unveils the underestimated costs of green hydrogen projects, challenging conventional wisdom about their feasibility. Join us for a comprehensive look at these pivotal developments and their implications for the future of energy.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I've got your energy stories for this.
The third week of October 2024.
And in the first one, theliteral power struggle between
Utility, aep Ohio and the datacenter giants, including Google,
amazon and Microsoft, isheating up and getting even more
contentious.
Last week, the tech companiesfiled a so-called negotiated
settlement with the Ohio PublicUtilities Commission to address
(00:22):
AEP Ohio's interconnectionproposal to deal with the
unprecedented requests for powerhookups.
Aep Ohio's presidentimmediately objected to the
settlement, saying the companyopposed it and the commission
should reject it as well.
Aep's original interconnectionproposal, filed in May, requires
the tech companies to enterinto 10-year contracts and pay
(00:43):
for 90% of their committedcapacity, while posting security
equal to 50% of the minimaldemand charge for the full
10-year period.
It argues that if the datacenters go bankrupt, the utility
has made costly upgrades whichothers would then have to pay
for.
At the time, in May, aap wasserving about 600 megawatts of
(01:04):
data center load, with 4,400megawatts of additional
interconnection requests.
That was a big jump, butnothing compared with the 30,000
megawatts of requests that havecome in since then that require
enormous infrastructureupgrades.
In their proposed agreement,the tech companies are asking
for a tariff that would apply toany new load larger than 50
(01:24):
megawatts if the utility canprove that a transmission
constraint exists.
They also argue for a moreflexible approach to capacity
payments that would increaseover time as facilities ramp up
consumption or change powerconsumption.
The companies are alsorequesting a regulatory inquiry
into whether AEP's transmissionsystem can be expanded by means
(01:45):
of grid-enhancing technologiessuch as dynamic line ratings and
reconducting, as well asbattery storage and virtual
power plants.
As utilities around NorthAmerica face similar pressures
in the face of unprecedentedlevels of AI-driven data center
demand growth, it's to beexpected that similar dramas
will play out in multiplejurisdictions across the
(02:07):
continent.
Sticking with capacity pricesof some nature, grid operator
PJM will delay its plannedDecember capacity auction for
six months in order to developreforms to the capacity market.
That delay would affect atleast three upcoming auctions
set to be held in six-monthintervals, including the planned
one for December to buycapacity for 2026-27 delivery
(02:31):
year, as well as auctions inJune and December of next year
that would have addressed2027-28 and the 2028-29 delivery
years.
The most recent capacityauction last summer saw massive
price increases, sufficient toraise Maryland electricity bills
, for example, by between 2 and24 percent, according to the
(02:51):
state's ratepayer advocate.
Well, more transmission lineswill help nearly everywhere
these days.
So the Biden administrationwill provide nearly 1.5 billion
dollars to boost fourlarge-scale power lines.
This is part of its 2.55billion US Department of Energy
Revolving Fund aimed at helpingbring riskier transmission lines
to life.
The four lines to be addressedhere would add nearly 1,000
(03:15):
miles of new transmission, whiledelivering up to 7,100
megawatts of new generatingcapacity throughout Louisiana,
maine, mississippi, new Mexico,oklahoma and Texas.
The Transmission FacilitationProgram has the DOE acting as
the anchor tenant, purchasingcapacity on the proposed lines
and then selling that to othercustomers once the lines are
(03:36):
commissioned Well.
The New York Power Authoritypublished its draft strategic
plan to grow renewable resourcesin New York, identifying 40
projects that will cover everyregion of the state, totaling
3.5 gigawatts.
Further work will be requiredto evaluate project economics,
community impacts and also realestate considerations.
And finally, a hydrogen studyby Harvard University
(03:59):
researchers shows that most costestimates related to H2
projects significantlyunderstate storage and
distribution costs needed todeliver green hydrogen to
different sectors and end uses.
The study concludes thathydrogen is a prohibitively
expensive strategy foraddressing greenhouse gas
emissions and that hydrogenproject costs often exceed those
(04:20):
related to directly removingCO2 from the atmosphere.
H2 is a tricky little moleculethat's not energy dense and has
a light atomic weight, amongother properties.
Generally it must be compressedor liquefied when being moved
and stored, and in a gaseousstate it can do that Houdini
thing and escape from nearlyeverywhere if pipelines and
containers aren't specificallydesigned for it.
(04:41):
So perhaps these findingsaren't too surprising.
Well, that's all for this week.
Thanks for watching, and we'llsee you again next week.
I've got your energy stories for this.
The third week of October 2024.
And in the first one, theliteral power struggle between
Utility, aep Ohio and the datacenter giants, including Google,
amazon and Microsoft, isheating up and getting even more
contentious.
Last week, the tech companiesfiled a so-called negotiated
settlement with the Ohio PublicUtilities Commission to address
(00:22):
AEP Ohio's interconnectionproposal to deal with the
unprecedented requests for powerhookups.
Aep Ohio's presidentimmediately objected to the
settlement, saying the companyopposed it and the commission
should reject it as well.
Aep's original interconnectionproposal, filed in May, requires
the tech companies to enterinto 10-year contracts and pay
(00:43):
for 90% of their committedcapacity, while posting security
equal to 50% of the minimaldemand charge for the full
10-year period.
It argues that if the datacenters go bankrupt, the utility
has made costly upgrades whichothers would then have to pay
for.
At the time, in May, aap wasserving about 600 megawatts of
(01:04):
data center load, with 4,400megawatts of additional
interconnection requests.
That was a big jump, butnothing compared with the 30,000
megawatts of requests that havecome in since then that require
enormous infrastructureupgrades.
In their proposed agreement,the tech companies are asking
for a tariff that would apply toany new load larger than 50
(01:24):
megawatts if the utility canprove that a transmission
constraint exists.
They also argue for a moreflexible approach to capacity
payments that would increaseover time as facilities ramp up
consumption or change powerconsumption.
The companies are alsorequesting a regulatory inquiry
into whether AEP's transmissionsystem can be expanded by means
(01:45):
of grid-enhancing technologiessuch as dynamic line ratings and
reconducting, as well asbattery storage and virtual
power plants.
As utilities around NorthAmerica face similar pressures
in the face of unprecedentedlevels of AI-driven data center
demand growth, it's to beexpected that similar dramas
will play out in multiplejurisdictions across the
(02:07):
continent.
Sticking with capacity pricesof some nature, grid operator
PJM will delay its plannedDecember capacity auction for
six months in order to developreforms to the capacity market.
That delay would affect atleast three upcoming auctions
set to be held in six-monthintervals, including the planned
one for December to buycapacity for 2026-27 delivery
(02:31):
year, as well as auctions inJune and December of next year
that would have addressed2027-28 and the 2028-29 delivery
years.
The most recent capacityauction last summer saw massive
price increases, sufficient toraise Maryland electricity bills
, for example, by between 2 and24 percent, according to the
(02:51):
state's ratepayer advocate.
Well, more transmission lineswill help nearly everywhere
these days.
So the Biden administrationwill provide nearly 1.5 billion
dollars to boost fourlarge-scale power lines.
This is part of its 2.55billion US Department of Energy
Revolving Fund aimed at helpingbring riskier transmission lines
to life.
The four lines to be addressedhere would add nearly 1,000
(03:15):
miles of new transmission, whiledelivering up to 7,100
megawatts of new generatingcapacity throughout Louisiana,
maine, mississippi, new Mexico,oklahoma and Texas.
The Transmission FacilitationProgram has the DOE acting as
the anchor tenant, purchasingcapacity on the proposed lines
and then selling that to othercustomers once the lines are
(03:36):
commissioned Well.
The New York Power Authoritypublished its draft strategic
plan to grow renewable resourcesin New York, identifying 40
projects that will cover everyregion of the state, totaling
3.5 gigawatts.
Further work will be requiredto evaluate project economics,
community impacts and also realestate considerations.
And finally, a hydrogen studyby Harvard University
(03:59):
researchers shows that most costestimates related to H2
projects significantlyunderstate storage and
distribution costs needed todeliver green hydrogen to
different sectors and end uses.
The study concludes thathydrogen is a prohibitively
expensive strategy foraddressing greenhouse gas
emissions and that hydrogenproject costs often exceed those
(04:20):
related to directly removingCO2 from the atmosphere.
H2 is a tricky little moleculethat's not energy dense and has
a light atomic weight, amongother properties.
Generally it must be compressedor liquefied when being moved
and stored, and in a gaseousstate it can do that Houdini
thing and escape from nearlyeverywhere if pipelines and
containers aren't specificallydesigned for it.
(04:41):
So perhaps these findingsaren't too surprising.
Well, that's all for this week.
Thanks for watching, and we'llsee you again next week.
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